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Ada Pertanyaan? Hubungi Kami Marcell Sihombing, Kartini L. Makmur
The MInistry of Energy and Mineral Resources. Photo by: RES
In an effort to speed up growth in the country’s domestic natural-gas sector, the government is looking to revise Minister of Energy and Mineral Resources (ESDM) Regulation No. 37 of 2015 on Provisions and Procedures for Determining the Allocation, Utilization, and Price of Natural Gas (2015 Regulation).
The 2015 Regulation is believed to be hampering the operation of Indonesia’s domestic natural-gas industries, due to the fact that the regulation obliges businesses that are looking to secure a natural-gas allocation to have ownership of the necessary infrastructure, including pipelines. Prior to this regulation, any party could secure a gas allocation without the need to possess any such assets.
“The idea behind the 2015 Regulation is to develop infrastructure. Anyone who is looking to secure an allocation of gas must construct the relevant infrastructure. This is a requirement and there can be no ifs or buts,” explained IGN Wiratmaja Puja, the Director General for Oil and Natural Gas at the Ministry for ESDM in Jakarta on Thursday, 7 December 2015.
Mr. Puja strenuously denies the allegation that the cause of the revision has been pressure from so-called “other parties.” This allegation has arisen due to the fact that the 2015 Regulation has not been implemented for two full months since it was first signed by the ESDM Minister, Sudirman Said, on 13 October 2015.
Mr. Puja claims that the revision, which is currently under deliberation, in fact has the goal in mind off perfecting the regulation, as he believes that the current regulatory framework does not regulate the role of private parties who own gas infrastructure clearly enough.
Mr. Puja points to the fact that the government intends to offer a level playing field to all businesses to compete upon as regards the development of the country’s gas sector, be they state-owned enterprises (BUMN), regionally owned enterprises (BUMD), or private parties. According to Puja, this intention has to be clearly defined under some form of a “standardized game rule”, which is why a revision has become necessary.
With this goal in mind, Mr. Puja guarantees that the revision of the 2015 Regulation will ensure that the so-called gas sellers who are solely reliant on papers (specifically, official licenses) will not be able to enjoy a free-reign, since the mandatory infrastructure construction requirement will remain in effect.
Mr. Puja further revealed that the revision will strengthen the idea that businesses applying for gas allocations will have to actually be in possession of the relevant physical infrastructure. Mr. Puja also expressed the firm belief that such a concept was crucial in order to ensure that natural gas was properly channeled to Indonesian consumers, be they households, fertilizer factories, other gas-fueled industries, or even transportation systems.
“There should be infrastructure in place such as pipeline networks, after all there are many kinds of pipe. There is also the matter of metering and measurement devices to consider, both upstream and downstream,” emphasized Mr. Puja.
Mr. Puja also stated his intention to ensure that any infrastructure possessed by sellers of gas was in full compliance with its allocation approval. By way of example, pipelines should be of a sufficient length, while compressor stations may also be needed.
“The Ministry for ESDM has to consider such facilities, both already existing infrastructure and infrastructure which will be built in the future, when granting gas-allocation approvals. Soon-to-be-built infrastructure, including new fields, will have to be taken fully into consideration when allocations are granted,” explained Mr. Puja
The upcoming revision of the 2015 Regulation will also regulate the involvement of foreign parties. Mr. Puja emphasized that his institution was not intending to prohibit investment from foreign companies who had expressed a willingness to build natural-gas pipeline networks in Indonesia, provided that such companies satisfy the necessary requirements.
Mr. Puja explained that in order to be eligible for a gas allocation, a company must first register under Indonesian law, meaning that any foreign company seeking to venture into Indonesia’s gas industry must enter into cooperation with Indonesian companies, whether they be a BUMN, BUMD, or private company. As for the type of cooperation, Mr. Puja explained that this could take a number of different forms.
“Cooperation with foreign parties is okay. Take the construction of a very long pipeline, for example. Since such a project would require substantial funding, cooperation with foreign parties would be fine,” concluded Mr. Puja.
(sp)
Marcell Sihombing, Kartini L. Makmur
The MInistry of Energy and Mineral Resources. Photo by: RES
In an effort to speed up growth in the country’s domestic natural-gas sector, the government is looking to revise Minister of Energy and Mineral Resources (ESDM) Regulation No. 37 of 2015 on Provisions and Procedures for Determining the Allocation, Utilization, and Price of Natural Gas (2015 Regulation).
The 2015 Regulation is believed to be hampering the operation of Indonesia’s domestic natural-gas industries, due to the fact that the regulation obliges businesses that are looking to secure a natural-gas allocation to have ownership of the necessary infrastructure, including pipelines. Prior to this regulation, any party could secure a gas allocation without the need to possess any such assets.
“The idea behind the 2015 Regulation is to develop infrastructure. Anyone who is looking to secure an allocation of gas must construct the relevant infrastructure. This is a requirement and there can be no ifs or buts,” explained IGN Wiratmaja Puja, the Director General for Oil and Natural Gas at the Ministry for ESDM in Jakarta on Thursday, 7 December 2015.
Mr. Puja strenuously denies the allegation that the cause of the revision has been pressure from so-called “other parties.” This allegation has arisen due to the fact that the 2015 Regulation has not been implemented for two full months since it was first signed by the ESDM Minister, Sudirman Said, on 13 October 2015.
Mr. Puja claims that the revision, which is currently under deliberation, in fact has the goal in mind off perfecting the regulation, as he believes that the current regulatory framework does not regulate the role of private parties who own gas infrastructure clearly enough.
Mr. Puja points to the fact that the government intends to offer a level playing field to all businesses to compete upon as regards the development of the country’s gas sector, be they state-owned enterprises (BUMN), regionally owned enterprises (BUMD), or private parties. According to Puja, this intention has to be clearly defined under some form of a “standardized game rule”, which is why a revision has become necessary.
With this goal in mind, Mr. Puja guarantees that the revision of the 2015 Regulation will ensure that the so-called gas sellers who are solely reliant on papers (specifically, official licenses) will not be able to enjoy a free-reign, since the mandatory infrastructure construction requirement will remain in effect.
Mr. Puja further revealed that the revision will strengthen the idea that businesses applying for gas allocations will have to actually be in possession of the relevant physical infrastructure. Mr. Puja also expressed the firm belief that such a concept was crucial in order to ensure that natural gas was properly channeled to Indonesian consumers, be they households, fertilizer factories, other gas-fueled industries, or even transportation systems.
“There should be infrastructure in place such as pipeline networks, after all there are many kinds of pipe. There is also the matter of metering and measurement devices to consider, both upstream and downstream,” emphasized Mr. Puja.
Mr. Puja also stated his intention to ensure that any infrastructure possessed by sellers of gas was in full compliance with its allocation approval. By way of example, pipelines should be of a sufficient length, while compressor stations may also be needed.
“The Ministry for ESDM has to consider such facilities, both already existing infrastructure and infrastructure which will be built in the future, when granting gas-allocation approvals. Soon-to-be-built infrastructure, including new fields, will have to be taken fully into consideration when allocations are granted,” explained Mr. Puja
The upcoming revision of the 2015 Regulation will also regulate the involvement of foreign parties. Mr. Puja emphasized that his institution was not intending to prohibit investment from foreign companies who had expressed a willingness to build natural-gas pipeline networks in Indonesia, provided that such companies satisfy the necessary requirements.
Mr. Puja explained that in order to be eligible for a gas allocation, a company must first register under Indonesian law, meaning that any foreign company seeking to venture into Indonesia’s gas industry must enter into cooperation with Indonesian companies, whether they be a BUMN, BUMD, or private company. As for the type of cooperation, Mr. Puja explained that this could take a number of different forms.
“Cooperation with foreign parties is okay. Take the construction of a very long pipeline, for example. Since such a project would require substantial funding, cooperation with foreign parties would be fine,” concluded Mr. Puja.
(sp)